There are however, some big problems. The foremost is the fact that the internet is a global entity. This site would have to have some kind of security measures in place to make sure that only people in China would be able to access it. Otherwise, taxpayers in China alone would be funding free music for the entire world. Along with this problem is the thought that if everyone could have access, the actual money would end up going to the wrong people. The tastes of the Chinese people would be skewed by the outside world and the people paying for the service would have little say in who was popular and receiving moneys. Both the consumers and the copyright holders would feel cheated.

Companies would need to have the option to be a part of this system and not be forced into participation. On the other hand, the Chinese government might restrict the companies that could participate in the ACS in an effort to boost the native Chinese film and music industry. I think there would need to be a balance between the two. Too much restriction and China could get in trouble with the World Trade Organization for protectionism and possibly boost the pirate industry. Too little restriction and outside forces could completely wipe out the Chinese creative industries.

Another barrier for ACS would be the taxation system in China. Currently, it is shoddy at best, especially in the rural areas. Taxes are often not collected or withheld because most transactions are cash based or untraceable. People who are not using these technological devices for entertainment purposes might feel cheated as well by this taxation because they are paying for something they don’t use. Also, through this system, the government would have broader control over what the public had access to. As I mentioned above, this censorship could enhance the value and increase the demand in pirated works, bringing us back to square one.

One point that was brought up was the question of whether such a system, when implemented, would stunt the growth of the industry. As of now, with the current course of action, businesses are working hard to adapt to the new, technological world. They are coming up with new ways of making money and new ways of adding value to their products. If an ACS were implemented, would this growth stop? What would happen if the rest of the world did not adopt such a system? Chinese film and music companies would only be able to make money in China because they had not adapted to a market outside of ACS. They would not know how to make money in the United States or Europe.

I believe the ACS is a good idea in theory, but there are still many holes to plug up. A technologically minded person could easily trick this system into thinking their IP address was in China or be able to steal someone’s username and password. With the music industry changing and growing so quickly, I think a system such as this would stagnate that growth in China and put it behind in the race to monetize music once again. It could have devastating impacts on China’s future in music and films. I believe that foreign countries were right to push China to create a copyright law and teach people about the value of their creative works. But I don’t think, seeing as China is making broad steps forward, that foreign countries are right to continue to push China into possibly implementing this system. It takes a long time to adopt new thoughts and values. In the end, I think foreigners should be focusing on adapting to their own markets and let China take its time. Patience is a virtue.

There are three foreseeable paths that China could take in the future. I’ll start with the most reasonable, that China will stay the course and continue to expand it’s copyright laws and slowly enforce them. The second involves cracking down more harshly on piracy, both physical and digital, in the attempt to completely eliminate it. The third involves implementing an Alternative Compensation System which I will explain in the next blog post on China.

What we can expect to see is that China will stay the course with what it is currently doing. Slowly, the government is training officials to deal with copyright infringement cases. They are educating the public also, on the importance of copyright protection to a growing society. It will protect the music and film industries in China and help build a strong economy based on scientific and artistic relevance. The Chinese government is also doing more raids for illegal physical copying and implementing and enforcing more laws to bring justice to the copyright holder.

This will however, be a long journey. Most foreign countries are looking for the solution to be quick in order to regain lost revenues in the Chinese market. Often times, countries and businesses are pulling out of China. We do see some promise though. As the economy grows, the middle and upper classes will grow, and there is a possibility that the market for legal copies will grow. The number of arrests for copyright infringement has grown in China within the last couple years.

There are a couple possible outcomes to this way of moving forward. With a slow move to enforcement and a huge loss in capital due to bringing infringers to court, companies will start finding new ways of making revenue. They will most likely abandon physical copies as a means for making money and look to other ways to fund themselves. This will become a very creative environment, I believe, and produce an evolving and changing market that will be good for the music business around the world.

Another outcome could be that instead of moving away from relying on copyright protection, companies could increase their control by reinstating DRM or other software that would protect the copyrights. This would minimize the amount of music and art the public would have access to and in the end, lessen the desire to contribute creatively to society. Only really commercial artists would make it and only the rich would be able to access the plethora of music available. This may also bolster the demand for physically pirated CDs and DVDs which would provide a wider array of choices.

Because China was coerced into introducing a copyright law for the benefit of others, it didn’t see the merit in it at first. Now that Chinese film and music companies are feeling the pressure and loss from not having their works protected, I believe the Chinese government will crack down harder on piracy. They are slowly making moves and as they realize their own economy is at stake, they’ll begin implementing laws and enforcing them more quickly.

The second course China could take would be to begin to crack down very hard on both physical and digital piracy. Both types of enforcement have their own unique problems. I will start by looking at physical piracy.

The ideas of intellectual property and copyright law are new to Chinese citizens. Therefore, most courts on a local level are unprepared to hold trials and mete out punishments to the nth degree of the law, because they are uneducated in this area. In piracy cases, the criminal is tried in the county or city where he lives. Most counterfeiters do not set up business in the middle of a large city. They choose to be located in smaller, less visible cities. These cities are the ones that house the least educated judges in matters of copyright and therefore the criminal is often let off easy.

Going hand in hand with this is the idea that the criminal penalties are not severe enough to deter potential pirates. The thought is that they’ll get a slap on the wrist, maybe a fine and then can go on and continue what they were doing. The business is so high in revenues for people who have so little that there is a high reward versus low risk involved.

The Chinese government has a strong hold on the influx of foreign movies into the country. They only allow a certain number to be shown on screens and sold in stores. Therefore, demand for these other movies has skyrocketed, producing a pressure on the pirating industry to fill the void. This is one huge problem that the state has in reducing piracy. Along with this is the reality that technology is becoming so good and so easy to use that pirates are producing products that are virtually indistinguishable from the original. This raises the question, “Why buy the original when the pirated copy is half the price and functions exactly the same way?” As the economy gets stronger and the middle and upper classes grow, the thought is that there will be more of a demand for the original, unpirated product. I believe, however, that consumers will continue to buy the cheaper product, regardless of their income because they are both used to it and see no added value in buying the more expensive of the two. I assume that this would change if the government were to educate people on the values of copyrights and instill in them the morals of buying the original copy regardless of the price. If the upper and middle class public could be convinced that they would benefit in the long run from buying the original and supporting the copyright owner, I think this would turn around and produce a reduction in the demand for pirated copies. “The goal is to inculcate an innate sense of ownership regarding one’s own creations, and to teach people that there is value in purchasing legitimate rather than pirated goods.”

Now comes the question of cracking down on digital piracy. The actors that are trying to eliminate this form of piracy are failing miserably. The idea is to monitor websites and try to punish all those that are downloading music and film illegally. Outside of China this proves to be a difficult problem and most people instill some sort of value in copyrights. Inside of China, there are millions of people with internet access that hold no value in copyright. It is nearly impossible to seek to eliminate it. Some companies are trying though. Universal Music just employed a company called R2G which will monitor websites for illegal use of Universal’s copyrighted songs. Universal has given them permission to sue copyright infringers for them, but the idea is to nudge them into using a legal site for their music experiences instead. Companies have been suing the search engines as well who list illegal sites and essentially aid in copyright infringement. These paths seem useless however, because it is very difficult for private entities to spend the time and money to essentially police the internet. There seems to be another way that is slowly evolving, called an “Alternative Compensation System,” which I will cover in the next blog.

As in the United States, it is not necessary to register your copyright in order to have it protected but it is recommended. The copyright lasts for the life of the author plus fifty years and, unlike the U.S., China recognizes moral rights in a piece of work. Some of the limitations in the law are different from other countries in order to realize the socialist agenda in copyrights. The State can use your work if it is deemed necessary in order to fulfill its duties.

For the first time in its history, China’s copyright law provides for enforcement and remedies for copyright infringement. These include everything from money to public apologies and even jail time. This is the most difficult part of implementing copyright law in China. Because it is a huge landmass, it becomes very difficult to regulate all of the citizens within. Since intellectual property rights are a new concept for the Chinese, courts and officials need to be trained in dealing with these issues. We will continue to see piracy levels in China at an alarming level if the system of enforcing copyright law does not improve. In 2004, China’s Supreme People’s Court lowered the legal threshold for trying someone for criminal punishment and were able to put rounded figures on the previously general terms of “relatively large” and “huge” profit gains which decided how much a person would be fined or how long their jail sentence would be. This was a big step in ensuring that the policy on paper could be upheld in real life.

Copyright protection is a critical part of maintaining and promoting a creative culture. It boosts the economy by protecting authors and creators and supporting cultural works. It is a common idea in most of the world, but China has lagged behind in adopting a copyright law. This paper will give a brief history of intellectual property laws in China, explain the current state of Chinese copyright law and form conjectures about what steps are next.

The earliest form of regulation began in A.D. 835 with a doctrine that denied anyone but the emperor from producing calendars and almanacs. The reasoning was that the emperor was the only one who could foresee natural events and any attempt outside of his jurisdiction would undermine his power. During the Tang Dynasty, from A.D. 618-907, the first rewriting of the original doctrine was undertaken. It added to the outlawed works official histories and works on Buddhism and Daoism among others. Between A.D. 960-1279, the Song Dynasty rulers amended the laws again and required a copyright registration. All works printed would have to be submitted to local officials first, to regulate the ideas being spread. The first copyright laws and protection were mostly intended to protect the government and allow political leaders to control the dissemination of information. This form of central government prevented intellectual property rights from appearing organically in China and made it difficult for them to be implemented there later on.

In the 1840s, China opened its ports to welcome foreign trade. Because most items were bought in bulk from other countries, foreigners had no problems with the lack of intellectual property rights. As trade expanded however, piracy became an increasing problem. Copying others’ works was not seen as a legal wrong until the idea was introduced by foreign importers.

In 1903, the United States convinced China to sign a treaty providing for the protection of American copyrights, patents and trademarks. China agreed readily but because it did not have an infrastructure involved in monitoring this, piracy remained rampant. The United States was unable at this time to convince Chinese politicians that protecting individuals rights to their creative and scientific works would be a boon to the economy. Soon after, China’s Qing Dynasty fell and the country became ravaged with wars and revolutions. Intellectual property rights were the least of the country’s worries and wouldn’t take the front seat again until the late 1970s.

During the cultural revolution that took place from 1966 until 1976, piracy was commonplace. The government had taken over any private works and published them at will, considering them to be owned by the government. There was no regard paid to the authors of creative endeavors. This continued until President Deng Xiaoping came into power. He recognized the utility of copyrights and their power to encourage economic growth as well as enrich society with creative stimulation. It was also necessary in order to attract foreign investors and allow foreign trade to continue.

The 1990 Copyright Law skirted the line between protecting the personal rights of the copyright holder and the socialist belief in the rights of the public. There were many allowances put in this version for the government to use works in television shows and on the radio, free of charge. It also refused to protect any works that the government deemed to be non-conformist. But it finally made copyright infringement illegal and provided for remedies. China continued to be unable to enforce these laws however and piracy remained prevalent.

Although Russia is one of the most promising countries for the music industry and economists alike, not much can be written about their music industry. In past years, most notably the 70’s and 80’s Russian musicians were known to use homemade amplifiers and guitars made out of different materials found around the house. This drastically changed as the iron curtain was removed and more recently, when Putin was put into power. Now, with increased access to online stores, musicians have a broader access to the musical supplies they crave. This has influenced Russian music to an enormous degree and now most artists are relying on mixers and loops to help them form one man bands. The biggest debate now is whether this is helping or hurting the creativity and soul in music.

Another brief issue in Russia is the rampant piracy of music. On August 1, 2013, Russian government enacted an anti-piracy law that allowed copyright owners to petition to shut down infringing websites. Many people were in favor of this bill, but some people questioned whether the wording was too broad. They feared that many sites would be shut down that simply linked to infringing websites. So far, very few websites have not conceded to removing the infringing content, and only “three out of fifty-six applications have led to blocking a website.”

Vkontakte, a Russian version of Facebook, has begun to remove some of its user posted content due to this new legislation. For years this site has hosted a file sharing feature for users that has infamously been used as a means for users to share music illegally. They have begun policing this use more closely. In a recent court case against Soyuz, a Russian label, Vkontakte was found to be not responsible for its users content. The court ruled that it wasn’t possible for Vkontakte to police all of its users and remove infringing material. Vkontakte is however, attempting to create a legal and legitimate way for users to access music on their site. They are possibly looking to partner with an existing streaming or downloading company in order to move forward and away from potential further litigation. We have only to wait.

ITunes was introduced into Russia in 2012 and already accounts for a third of all online music sales. This is a promising figure and shows that there is a potential for a legitimate market for music in Russia. How the labels will choose to harness this behemoth of a country, we have yet to see.

Brazil is an emerging market in the music industry and one that holds much promise. It is essentially made up of two separate markets; one, the growing middle class and more affluent citizens who still purchase music and CDs from the Big Four, and two, the poorer citizens who are adapting the market to fit their needs and budgets.

Tecnobrega is a form of music that originated in the city of Belem in Brazil. Translated, it means “tacky” or “cheesy” music. It’s catching on wildly in Brazil among the poorer classes. The idea behind it is that, with little capital a person can record a cd over previously made beats or popular songs. They then make several hundred copies of the CDs and distribute them to local street vendors. The street vendors then sell them for $2. The CDs often contain hundreds of songs. When songs become popular they are played by DJs at all-night, outside parties with epic sound systems. The hope is that the song will become so popular that the creator will be able to put together a band and perform their songs live. This is where the money is made. A performer can make $1200 a night off a cut of the door and can perform twelve nights in a month. That’s $14,400 a month, a huge income for a country housing about 51.6 million people below the poverty line.

This industry of tecnobrega is quite an innovative one. Artists expect no royalties from their records and have little regards for the copyrights of others’ songs that are used to make their tracks. In return, they see a huge amount of easy distribution with little to no cost to them. They’ve given up the thought of making money off of a physical product and have turned instead to the live presentation and experiential music.

On the other hand, we have the Big Four record companies (Sony BMG, Universal Music Group, EMI Group and Warner Music Group) are still attempting to dominate the future of Brazilian music. They are having little success. There has been recent outrage that Brazil is not adequately protecting foreign copyrights. As a member of the WIPO, Brazil needs to have certain laws in place as well as a system of enforcing them. Brazilian Government is currently revising the laws to better clarify some licensing aspects and allow for fair use. It will also make it legal for a person who purchased an album to transfer it to their iPod.

While Brazil is making steps in the right direction, it is still seeing difficulties in enforcing these laws. The Big Four have been very vocal about their loss of rights in the Brazilian market, but in all fairness, their not really playing the game.

The Big Four only release 40 albums each year of Brazilian artists. With 198.7 million people, that’s not a very accurate or large representation. Secondly, CDs continue to be priced between $13 and $18 which is well beyond the means of most people living in Brazil. So why would pirates not take advantage of this gap in the market? It seems quite easy to blame all your problems and losses on someone else.

In France I looked at a music industry based on protecting local art and music and ensuring that the French culture is preserved for years to come. The Japanese music industry is doing this flawlessly, without government assistance. According to the RIAJ(Recording Industry Association of Japan), 84% of recorded music is domestic and only 16% is international. The amount of domestic music that is recorded and consumed is growing every year.

There is a strong relationship between youth and music in Japan, as can be seen in many other countries. But in Japan, this relationship is much stronger and much more broad. Most young teens harbor fantasies of becoming rockstars and practice long and hard to fulfill those dreams. Music and instrument stores are abundant in most cities and you can see millions of indie band videos on Youtube of young, practicing musicians. These dreams fade as these teens enter college and then the workforce, but many move to Tokyo to play in nightclubs and pursue their dreams.

A record deal is much different in Japan and is often not negotiated at all. If you are signed by a major label, you become an employee and receive a salary. This is a standardized system that occurs in all of Japan in order to support musicians and make life in general, run more smoothly. The price of CDs and DVDs is also standardized.

Japan’s music industry has risen from second place this year to become first in the world. One of the reasons for this is that most companies agree to price fixing and offer CDs and DVDs for one agreed upon price. CDs therefore, are much more expensive in Japan than in other parts of the world. An album sells for about $30. Although, people may not be buying more, they are spending more.

The most important aspect of Japan’s music industry, and the main reason for it’s elusive “Number 1” status is a phenomenon known as J-Pop. J-Pop is short for Japanese Popular Music and it has been an ongoing obsession for the Japanese public for years. Young, bubblegum stars, mostly girls in groups of 10-15 sing bright-eyed pop songs dressed in colorful outfits. The line-up for these groups is constantly changing mostly based on demand. Fans can vote for their favorite girl or for the next lead singer on a single. They are encouraged to come to live shows, buy photos of the girls, and come to “handshake sessions” where they can meet their favorite singer.

It seems like the regular American music industry, but it has a significant twist. Fans are embroiled in the lives of the stars. They follow their favorite girl closely. And the key is album sales. In order to gain a vote, you must buy an album. Fans often buy a hundred albums in order to vote for their favorite girl a hundred times. Albums are also tickets to the “handshake sessions.” Some fans purchase 10 or 15 of the same exact album, in order to go through the line 10 times. Not only this, but the producers often release three or four versions of a single album with different music videos or photo booklets in order to promote purchasing.

This fandom universe may change and evolve in the coming years to include digital growth, but Japan is continuing to see a slump in digital sales and revenues. The next foreseeable move for the Japanese music industry is to expand and export the Japanese music that is so prevalent there. They have seen some expansion in South Korea and other Asian countries but their goal is to create a worldwide fan base.

Great Britain is very interesting when it comes to music. It has the third largest industry in the world, coming behind only the United States and Japan. And it’s growing in popularity. According to the BPI (British Phonographic Institute), Britain’s market share for album sales was up to 13.3% globally in 2012. The top selling album, globally for five out of the last six years has been a British artist. Things are looking up for Great Britain and their eternal struggle with the United States for dominance in the music industry.

British music has always been popular around the world, especially in the United States. Led Zeppelin, Queen, Adele, and The Rolling Stones are only a few of the plethora of bands that have stolen the hearts ears of Americans, so it’s no surprise they’re seeing such success now. But the British music industry is still seeing the tough times that the rest of the world are experiencing. Streaming sites like Deezer and Spotify are seeing increases in the numbers of subscribers but it isn’t enough to make up for the 19.5% decrease in album sales from 2011 to 2012.

Starting in 2011, Great Britain started looking at the music industry in a new way. They started to put a price on music tourism. A partnership between UK Music and PRS (Performance Rights Society) for Music yielded the first every official statistics of the impact of music festivals and concerts on the economy of Great Britain. It attempted to estimate how many people come into the UK each year as “music tourists.” The definition of a music tourist is “someone who booked a ticket to a live music event in the UK while still in their own country, prior to traveling.” (http://www.ukmusic.org/assets/media/UK%20Music%20-Music%20Tourism.pdf) This definition includes people who live in parts of Great Britain but traveled to other parts in order to see a concert or festival. According to this year’s survey entitled the “Wish You Were Here” report, 6.5 million people came to Britain for music tourism purposes spending 1.3 billion pounds. This survey also estimated that the music tourism industry supports 19,700 full time jobs.

With the incredible amount of information on music tourism, people are lobbying the government to spend more on advertising the rich and diverse music scene in order to spur the economic growth of Great Britain. Starting this year, the UKTI (UK Trade & Investment) teamed up with the BPI to set up a fund for small labels that intend to export their music worldwide. This will hopefully secure Great Britain’s title as one of the leading countries in the music industry. Successfully marketing and selling music overseas contributes 100 million pounds to the British economy annually. The hope is that this fund will help increase awareness of smaller British artists and in the end help boost the economy.

The music industry is in a tumult. No one can tell where it’s going. Most people are looking to the live industry as the revenue producer in the future. If this is true, Great Britain will be well on it’s way to being a leader in the near future.

Across the global market, a trend is taking hold. Declining revenues in physical sales of albums are being replaced by increasing sales in the digital world, particularly music streaming platforms such as Spotify and Deezer.

In Germany however, physical sales dropped off much more slowly and are holding their own, accounting for 71% of total revenues in the industry according to BDVM (Bundesverband Musikindustrie). In an interview with Rolling Stone, Frank Briegmann, president of Universal Music Germany stated, “Over the past few years, we have repeatedly tried to generate impetus for the physical market without merely lowering prices.” Much of the strength of the physical market in Germany can be explained by packaging. Artists often release extra features and special editions, but German artists and labels are releasing something called “Pur Edition” several months after the initial release. These editions have stripped down packaging and streamlined inserts to provide a lower cost model for consumers.

Another example of why Germany’s physical market was so strong might be evidenced by the GEMA (Gesellschaft fur musikalische Auffuhrungs- und mechanische Vervielfaltigungsrechte)’s dispute with Youtube in 2009. The German courts found that Youtube can be held liable for any infringing videos that are posted on it’s site. For this reason, over 60% of the top 1000 most popular Youtube videos are blocked. This made many citizens unable to easily view music videos online. But this blockade has ended with an agreement between Vevo and GEMA. For the first time ever, Vevo will launch it’s videos without Youtube. This may help explain the decline in physical sales as people find it easier to watch videos and get music online.

Currently, 1 in every 5 euros that are being earned in Germany from the music industry now, are from digital sources. 8.4 million people purchased and downloaded music in 2012, 55% of which bought full albums. This is promising for artists looking at an increasingly singles dominated market. Music streaming platforms such as Deezer, Musik and Spotify hold a 12.1% share of digital revenues and 5 % of total revenues, the biggest amount of growth seen this year.

Germany’s music industry experienced a slight decline this year however, because these increased digital sales are not fully keeping up with the losses of physical revenue.

Unlike France, Germany’s number one single this week is not a native artist.

The French government has a history of being involved in protecting it’s musicians at home. In 1922, the Syndicat National de l’Edition Phonographique was established to collect royalties due to artists and to protect them from copyright infringement. Much like ASCAP and BMI work, SNEP attempts to provide musicians with what is owed to them.

Recently, the SNEP has taken a front seat in attempting to revive the supposedly dying music industry. With the artist’s views alway in mind, the SNEP has passed some laws that actually make it more difficult for others in the music business, as well as on the outskirts, to get by.

The first step towards protection of French music was the enacting of a bill in 1994 to require radio stations to air at least 40% of their music programming in French. This was prompted by a large influx of English language music, with the perception that no one would record in French anymore. Radio stations found a way around this by playing only older artists and songs that were proven hits. The SNEP revised the bill later on stating that at least 20% of the French programming had to be up and coming artists. This proves difficult in the age of globalization where artists, in order to be more universally appealing, sing mostly in English. Radio stations are attempting to appeal the bill so they can have more freedom to promote French artists who sing in English.

In 2009, SNEP introduced the HADOPI law (Haute Autorite pour la diffusion de oeuvres et la protection des droits sur internet). This law was enacted in order to reduce piracy and the use of unregistered sites to stream and download content. It required a committee to monitor the usage of unregistered sites and attempt to punish users who were accessing these sites. The first warning was a cease and desist email from the committee. If downloading continued, the committee sent a written warning by mail. If the user still ignored the warnings, the ISP was required to stop internet services to the user and the committee could sentence the user to high fines and even jail time. In early 2013 the law was repealed. It was costing the government too much to police the internet and the benefits had not yet been realized.

This was an important step forward however, because the use of unregistered sites has dropped dramatically as well as illegal downloading activity. The record labels are realizing that the money they are losing in sales is pretty much even with the rise in payment for streaming. It’s promising to see that the money is ending up back in the industry, even if it is not going to the record labels.

In an increasingly globalized world, the French are attempting to save their own culture. It’s proving a difficult task but the artists in France are appreciative. It is necessary to preserve ones culture because there is a fear that at some point, it will no longer exist. The French government is making it easy to put money back into the country and the resources and culture that exist there.